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Why This Big Corporation is Fighting to Help Small-Business Owners

They say this one specific issue is preventing people from becoming entrepreneurs and achieving success.
Why This Big Corporation is Fighting to Help Small-Business Owners
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In many U.S. states, interior designers, locksmiths, and manicurists have one big thing in common with doctors, nurses, and architects: They all need an occupational license. While it makes sense for people owning and working in businesses related to health and safety to have a license guaranteeing their professional certification, licensing requirements for many other professions can be excessive and potentially serve as a barrier to entry for many aspiring entrepreneurs.

So argues the team behind Koch Industries, one of the country’s largest privately held companies. Headquartered in Wichita, Kansas, Koch Industries is a multinational corporation with subsidiaries serving industries like manufacturing, energy, paper, ranching, and finance, among others.

Consider this for example: In 1950, the share of licensed workers in the U.S. was approximately 1 in 20. A recent study found that, today, the number has grown to more than one in four Americans needing occupational licenses to do their jobs. While some say these regulations are necessary to protect the public, many common professions like dance instructors and hair braiders, for instance, might require hundreds or thousands of dollars in fees as well as valuable hours, days, or even years spent in education certification.

“Too many occupational licenses are barriers for those who are seeking to improve their lives and contribute to society,” says Mark Holden, a senior vice president at Koch Industries. Holden says it is Koch Industries’ stance that decisions by consumers—not licenses by governments—are the most reliable indicators of who is qualified for a job. Moreover, he posits that occupational licensing laws “are too often used to protect established businesses and keep newcomers out, stifling competition.”

“These licenses go beyond professions like lawyers, doctors, and airline pilots, applying to hundreds of different entry-level and mid-level professions, from dog walkers and tour guides to florists, and bartenders,” he says.

The need for reform.

Occupational licensing rules vary by state. As such, there is no national standard for licensing requirements. For example, four U.S. states require four years—the equivalent of 1,460 days—of experience to obtain a license as a residential landscape contractor. Meanwhile, 40 states don’t require a license at all, according to the study.

The requirements are often disproportionate as well. While an emergency medical technician needs to complete about a month of education or experience on average, in some states a cosmetologist might need to have more than a year of training.

Another issue pertains to aspiring business owners who have a criminal record. In many states, and for numerous professions, having a criminal record is an immediate deal breaker for obtaining an occupational license. This, Koch Industries argues, inhibits people from reentering the workforce after serving a prison sentence since many of the sought-after jobs require occupational licenses.

“The thousands of state and federal collateral consequences of a criminal conviction make it incredibly difficult, if not impossible, for these individuals to get licensed, find employment, create value in their communities, and improve their lives,” Holden says.

More work to be done.

The leadership team at Koch Industries are firm believers that, as a society, everyone is safer and more successful if more people can pursue their chosen career, Holden says. To that end, Koch Industries has backed groups such as Americans for Prosperity, among others, that are working “on behalf of millions of Americans to improve access to job opportunities,” Holden says. “Just as Koch Industries companies make the products and provide the services that enable millions of people to improve their lives, we also support ideas and policies that will help everybody in society do the same.”

The company also worked closely with the Obama Administration on reforming occupational licensing rules. It continues to advocate for reforms today.

“This is an issue that transcends politics and geography,” Holden says. “There’s more work to be done, but it’s clear that people of all political persuasions are shining a light on these burdensome and unnecessary regulations that restrict workers’ opportunities.”

To learn more about Koch Industries, click here.

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